Understanding the changing catalytic converter landscape - Part II

Top Ten Converter Myths and Misconceptions

Over the years there have been many myths, misconceptions and legends in the converter business, which has translated into a problem for scrapyard owners and managers around the world. Who can be trusted with highly valuable cores? Buyers of all sorts have been knocking down doors for years offering "the best price" or "most money" for converters. With so many buyers out there, how can scrapyards possibly separate the wheat from the chaff? This article will give an insider's perspective on the top 10 common misconceptions in the catalytic converter recycling business, and how to actually get the most dollars for your cats.

In no particular order, as it would be very difficult to quantify the following myths and misconceptions, I will try to shine some light on the catalytic converter recycling process from the inside out. To qualify how I came up with this top 10 list, I have over the years spoken with hundreds of scrapyard owners and managers who have (with interesting and sometimes very colourful language) made some version of the following ten statements.

1.) "Getting multiple buyers to bid on my stock will get the best price."In theory this works well, as there are many different types of buyers out there and they will most definitely have conflicting information regarding converters. The conflict is present because each buyer will be selling the converters to different companies who in turn educate the buyers on the value of the material differently. Prices will vary further depending on how many times the converters change hands on their way to being processed and refined.

There are other factors to consider here as well. Has the buyer that won the bid inflated his pricing so he will not have to bid the next time? Is the mix of converters similar each month? (Bear in mind that it is next to impossible to make two identical loads of converters, because no converter lives the same life.) Are the core buyers in your area colluding to swap the winning bid back and forth every other load? How many serial numbers can each buyer actually see on your converters? What percentage of the load is being purchased by grade rather than number?

There's a lot to consider here, and the answers to these questions must keep many scrapyard owners and managers up at night. Truth be told, unless you are already dealing with a converter processor/refinery, the core buyer at your doorstep is going to sell the material up the chain and each hand will take a portion of the profit. There is nothing unusual about this, as core buyers are trying to make a living and survive while also (for the most part) trying to give you the best price for your converters.

In the end, the bidding war idea looks like it should be more profitable, but ultimately if converters are going to change hands, there is still money being left on the table that yard owners are missing out on.

It should be noted however, that there have been situations where yard owners and managers have received more money from core buyers for some of their converters than what they are actually worth after being refined and processed. Buyers will either overpay due to inaccurate pricing information or as a strategy to win a bid. Needless to say, these core buyers/companies have either gone out of business or will eventually no longer be able to sustain themselves before going under. Buyers will not be able to continuously overpay for material and sustain their operations - the two cannot coincide.

2.) "Selling by number gets more dollars."Many converter companies today are investing a lot of time and money into developing databases that contain the values of converters by serial number. Some are more advanced than others and are able to offer these tools online, while others are still sending out a price list every week. These lists can contain hundreds of different numbers with values.

There are three very clear reasons why this is not the most profitable way to sell material.

First, when a converter company pays for a converter by number they have taken one example of that converter (or sometimes several of the same number/converter) and analyzed that specific converter for its value. In order to be profitable they need to build in their profit margin to the value of the published number. Often these companies will allow a few rare numbers to be published at the top end, with next to no profit, to look like they are giving the seller more. In reality these numbers will represent less than one percent of any given load. The company will surely make up the difference in bigger margin converters.

Second, converters by nature are dirty, rusty things that are being harvested at the end of a vehicle's life. Even the most experienced buyer with the best information in the world will only be able to find, at best, 60 percent of the codes, even on converters that are in the most pristine condition. Once you factor in cars that are driven in regions where weather further impacts the condition and erosion of the converter, that 60 percent average could drop drastically to less than 25 percent. As a result, core buyers cannot stay in business if they are purchasing a high percentage of material at a low margin of return. They also cannot be aggressive in pricing with converters they are not familiar with. Essentially, core buyers need to ensure there are gains to be made on their end, which is done by taking a cut of the scrapyard owners converter profits.

Third, and perhaps most important of all, the buyer in your yard is still going to have to resell the material to a processor/refinery to make a profit. The change of hands ultimately means the scrapyard owner is at least one, if not two, steps away from getting the most value out of converters.

A box full of converters delivered to PMR's corporate facility.

3.) "I can evaluate a converter buyer by the price list he sends me."A price list is only as good as the buyer using it. Most yard owners and even managers can identify a large "bread loaf" from an "aftermarket." However, this is usually where the knowledge stops. There are so many converters out there that it is impossible to know every grade. Even exceptionally educated and knowledgeable buyers run across converters they have never seen before.

If you are simply looking at price lists and allowing the one with the highest pricing for your cats, there is a lot of money being left on the table. It is just human nature to grade material to the buyers' advantage. There are so many converters that have a much higher value than the category they are placed in - leaving the "great" looking price list flawed and inaccurate in value.

4.) "Cutting my own converters will get me more money."Here is a theory that, once again, looks great on paper. Contrary to popular belief, decanning converters is no easy task and making sure all precious metal content within the converter is retained and captured requires cutting-edge technology and machinery. With this cutting-edge technology comes high capital investment in equipment, health and safety education and other issues, as well as the salaries needed to employ individuals operating the machinery. And we cannot forget the pressure to produce the minimum material requirement of 2,000 pounds of ceramic to maintain regular business with a smelter.

Regardless, companies that begin cutting converters on their own will often make marginally more money than they do selling to core buyers, as most of the subjectivity is taken out of the equation. However: even some of the best equipment on the market today for cutting and collecting valuable dust is still not as efficient as using companies that specialize in this service.

Usually, when all the key factors are taken into consideration, most scrap-yard owners and core buyers leave the cutting to the specialists and spend time harvesting more converters.

5.) "I should follow the price of Platinum to know when it is best to sell my converters."This is one of my favourites. If I had an ounce of platinum for every time I have heard this, I wouldn't be writing this article. Either way, many people in the scrap industry do not realize that there are three precious metals recovered in auto catalyst - and gold is not one of them.

The three rare earth metals are platinum (Pt), palladium (Pd), and rhodium (Rh). Every different gasoline-based converter will have a different loading combination of all three metals. Auto manufacturers will load converters with these metals based on: the environmental requirement of the state the car is being delivered to; the combination of precious metals that will most efficiently convert toxic gas emissions to less harmful fumes released into the environment; and lastly, the load that will do the job for the least amount of investment.

The last factor is perhaps the most relevant to the creation of this misconception. Fifteen years ago, platinum actually did play a larger role in the value of a converter. However, in the years to follow, carmakers began to load converters more heavily with palladium due to it being less expensive.

Today, where platinum used to be the bigger load, palladium now counts for more than three ounces, compared to one ounce of platinum, making palladium the metal to pay most attention to. Bear in mind that the typically more expensive platinum comes in at a close second. Rhodium only makes up about one eighth of the precious metal recovered in converters.

6.) "Smelting converters is the end of the line for converter refining."This is one of the most common misconceptions in the industry. Smelting is one step closer to the end of the line for recycled ceramic converters, but is in no way the final procedure. What is even less known or understood is that no one gets paid for what comes out of a smelter.

A smelter requires thousands and thousands of pounds of material to be constantly added to the mix. It is impossible to tell whose metal is whose once the smelting process is started. Therefore, the only way ceramic auto catalyst is measured for value is pre-furnace, by laboratory analysis or assay. It is this assay that determines the recovery amounts of precious metals.

What comes out of a smelter is a combination of the three precious metals and is referred to as sponge. It really doesn't look like much of anything as it cools into ingots that must be chemically refined to be brought back to the more pure rare earth element state. There are very few companies that make the chemical transformation, and once again, no one is getting paid for their converters in this way.

The sorting table where trash and metal pieces are removed from ceramic substrate before it goes to the crusher.

7.) "You are only a toll refiner if you have a smelter."It is possible to be operating as a toll refiner and not own a furnace. In fact it can actually be more profitable to be a toll refiner and broker the furnace work. This is only possible if the toll refiner has a functional and accurate sampling method and laboratory to do the assay work.

As mentioned, the only way payment for a load of catalytic converters can be accurately defined is when the converters have been de-canned, the ceramic has been crushed and commingled and a sample of the load has been taken into the lab for testing. Toll refiners will then analyze representative samples by XRF (X-Ray fluorescence) and ICP (inductive coupled plasma) technology to determine the value of the total load from the average of the samples.

8.) "A smelter can pay more." Based on the evidence stated above, a smelter cannot pay more than the value determined by an accurate assay of auto catalyst, because the only way to pay for ceramic auto catalyst is by assay pre-smelting. What comes out of a furnace is the collective metal from thousands of tonnes of auto catalyst. It is not possible to separate one lot from the next at this stage of the process.

The only accurate method to determine the precious metal content of any given load of converters is at the pre-smelter stage, by sampling and assaying the load. Smelter or not, a lab assay of the ceramic material is all that counts.

For the sake of interest, what happens after ceramic is smelted is the real refining process. The metals are subjected to chemical treatment to separate them into their more pure state of Pt, Pd and Rh. Even after all this, the metals are not in the form of pure bars. Usually, at this stage the metal ounces produced are sent right back into automotive or industrial catalyst creation. Going to pure metal bars would take an additional heat treatment and would involve pouring into the bar itself.

9.) "A converter is worth X."Most yard managers and owners have been trained to believe that certain converters are worth ‘X' amount. This information has been taught and instilled by their core buyers. The issue behind this logic is simple. Each and every converter (even identical units) live a different life; therefore, it is impossible to categorize any given converter to have a retained value of X because even two identical converters can have a range of results upon analysis.

To illustrate this phenomenon, let's take a "Large Bread Loaf" converter as an example. Yard owners and managers have been trained not to accept a price less than $80 for any Large Bread Loaf when core buyers come to grade their units.

In reality, analysis results can range considerably for this grade of converter. Results will depend on the life cycle of the given converter in question, what state it was originally delivered in, what brand engine block it was attached to, and more. The ‘X' value of a given converter is impossible to know exactly without individual analysis.

In truth the value of a Large Bread Loaf can vary between $40 to $240. That is a pretty big spread. The average today is somewhere in the $80 range but that will also change with the price of precious metals.

The only way to get the real value from any given converter is through toll refining.

10.) "Bigger Converters are worth more money."Bigger is not always better. As mentioned throughout this article, every converter will retain different levels of platinum, palladium, and rhodium when it is analyzed and processed for recycling.

The truth is that not all converters are built the same. Car manufacturers are using different precious metal loads in different combinations for each and every different engine block. Older cars will have larger converters with lower loads of precious metal, while more recent models can have a much smaller converter with a higher load that exceeds the value of its older counterpart.

This does make things very confusing when trying to value a core. The best way to know is to work with a company that can provide an extensive database of converters depicting true current market pricing.

I really hope that this list has given you some insight into the complex world of converter recycling. There are many ways to sell your converters. Essentially however, the converters you are selling will end up in a batch that is decanned, processed and assayed prior to being smelted, chemically refined and, in most cases, made into another converter.

The only real way to get the most for a valuable core is to work as close to the end of the line as possible. Companies that are offering toll-refining settlements are really where the buck stops. Find one that can offer you great service, information and terms, and you will have found a great home for your auto catalyst.

Latest News

Equipment is arriving for Van Dyk's new test facility located in their Norwalk, CT campus. The site is currently home to their extensive spare parts warehouse (which holds over 13,000 different parts) and baler rebuild center (which fully reconditions balers for resale), and is their future headquarters intended to house their main offices and training classrooms.

December 13, 2017
A basic solution for smaller enterprises or recycling plants, the 518 trommel has what it takes for a first step in the separation of material mixtures.

With the new trommel screen Basic 518, the environmental specialist Doppstadt has placed a basic solution for small and medium municipal environmental services and recycling plants on the market. The innovation has a telling name: The Basic 518 has got exactly what it takes for a first step into the separation of material mixtures.

Essex, UK - Leading UK industrial & commercial waste specialist, Green Recycling, has announced the purchase of a Max-AI™ AQC (Autonomous Quality Control) to increase recovery of recyclables without adding additional manual labour at the company's commercial and commingled dry recyclables MRF in Maldon, Essex. Green Recycling is the first company in the UK to invest in this new technology, which has already been successfully installed in three US MRFs. Green Recycling's Max-AI AQC will be operational in Q1 2018.

Barford Equipment, the UK based manufacturer of mobile screeners, trailers, screen boxes, as well as wheeled and tracked conveyors, is poised to enter the US market in 2018 with the launch of the SR124 and the S104, two new track mounted screeners.

In its drive to reduce costs through the electrification of its track-mounted processing units, Keestrack is currently concentrating on hybrid crushing technology. Following teh lauch of its fully hybrid H4 cone crushers and B4e jaw crushers, Keestrack is now introducing the R5e hybrid impact crusher unit, designed to guarantee full capacity at low power consumption costs with the aid of a directly driven 350 t/h crusher and electrical transport and screen components.

Consider these facts. There are more than 4,700 facilities composting organics in the U.S., as per the "2017 State of Organics Recycling in the U.S." report released this fall by BioCycle magazine. There are 3,007 counties in the United States, most of which are required to update solid waste management plans on a regular basis. More than half of all U.S. states are in the market for a regulatory update and many of the rest are in the process of updating outdated regulations. That's a lot of regulatory and legislative action on the horizon for the compost manufacturing industry.

Martin Weissburg, currently President of Volvo Construction Equipment, will become President of Mack Trucks effective June 1, 2018, in which capacity he will continue to be a member of the Executive Board for the Volvo Group. Martin Weissburg was born in 1962, and has served as President of Volvo Construction Equipment since 2014. He joined the Volvo Group in 2005 as President of Volvo Financial Services Americas, and in 2010 became global President of Volvo Financial Services. He will be headquartered in Greensboro, North Carolina, USA.

PHOENIX, AZ - Republic Services, Inc. (NYSE: RSG) announced today that Jon Vander Ark, 42, has been named chief operating officer, effective Jan. 1, 2018. As COO, Vander Ark will be responsible for operationalizing the Company's strategy and executing its business plan across its field operations.

December 7, 2017
Machinex’s Pierre-André Mongeon at the Quebec City glass recycling facility.

Recycling Product News recently had the opportunity to ask a series of questions about the factors behind scrap glass market prices, and the nature of scrap glass as a recycled commodity, to Pierre-André Mongeon, Machinex's glass recycling solution specialist and an active member of the Glass Recycling Coalition (GRC).

Charleston County, South Carolina opened their compost facility in 1989. Back then, the concept was quite visionary and progressive - the idea of a municipality operating a compost site was still rather nascent. But for the first 20 years the outcome was moderate at best, as the operation mostly stockpiled green waste and let time do most of the work. That all changed dramatically in 2011 when they reached out to Darren Midlane of Harvest Quest. After applying Harvest Quest inoculants and committing to the MSAP (modified aerobic static pile) method, Charleston County's composting facility has transformed from the "armpit" of the landfill to a crown jewel of national waste management.

ISABELLA COUNTY, Michigan - Bandit Industries will spend all of 2018 celebrating its 35th anniversary at its mid-Michigan facility, with a world-wide dealer network, and with many thousands of customers spanning multiple industries.

Daimler Trucks North America (DTNA) has announced that David Carson, currently president of Freightliner Custom Chassis Corporation (FCCC), has been appointed president of Western Star Trucks and chief diversity officer of DTNA. Carson succeeds Kelley Platt who has been promoted within the Daimler AG global organization to president and chief executive officer of Daimler's truck joint venture Beijing Foton Daimler Automotive Co., Ltd. (BFDA) in China.

BRANTFORD, Ontario -- GreenMantra Technologies, a rapidly growing clean technology company that produces high-value polymer products from waste plastics, has launched a new website to provide customers, investors and other stakeholders with in-depth information about its revolutionary technology and products and their applications. The GreenMantra Technologies website can be found at www.greenmantra.com.

December 5, 2017
The newly upgraded SENNEBOGEN Maxcab is longer, providing the operator with both more personal space and additional room for creature comforts and storage.

Standard on SENNEBOGEN machines, the updated version of the Maxcab is about 3" (70 mm) longer than the previous generation. The resulting cab expansion not only provides more space for the operator to work comfortably. It also offers additional room for an optional electric cooler behind the seat, as well as additional storage space for other necessities.

Jeff Barber has worked at the Rapid City Solid Waste Division, in South Dakota, for 18 years and currently manages their yard waste and landfill operations. The division also provides residential collection of curbside recycling and operates an MRF. Barber's team produces three different types of compost, made from incoming MSW (municipal solid waste) or yard waste, including a 50/50 MSW/yard waste mix. The MSW and 50/50 composts are processed in a controlled environment, with the yard waste operation manually watering and turning the material to maintain an aerated, hygienically safe and finished product.

Mr. Kaiser, what is the importance of the recycling economy for Vecoplan?Stefan Kaiser:The recycling economy is one of the greatest challenges of the future. It will help to improve the overall image of the plastics industry - from the producer and processor to the recycler. We must learn to appreciate that we need to deal with plastics more sustainably. The recycling economy is important for Vecoplan, as a major part of our business lies in recycling and waste handling. We have been trying for a long time to put valuable raw materials back into circulation.

As of January 1, 2018, the Hydraulic Attachment Tools division within Atlas Copco will become part of the Epiroc, the company that Atlas Copco plans to dividend out in mid 2018. The division manufactures excavator attachment tools such as hydraulic breakers, cutters, pulverizers, bucket crushers, shears, grapples and magnets. Also effective from that date, all the division's current products will be delivered with Epiroc product branding.